The Energy Information Administration raised its price outlook for Brent crude to $41 per barrel for the second half of 2020—this is $4 per barrel higher than the EIA’s forecast last month.
In its Short-Term Energy Outlook (STEs expectation that global oil inventories will continue to decline in the second half of the year and throughout next year.
“EIA expects high inventory levels and surplus crude oil production capacity will limit upward price pressures in the coming months, but as inventories decline into 2021, those upward price pressures will increase,” the EIA said in a summary of its monthly report.
Specifically, the EIA is forecasting that global liquid fuel inventories will rise at a rate of 6.7 million bpd in H1 2020, and then decline at a rate of 3.3 million bpd in H2 2020. Finally, in 2021, the EIA expects that inventories will decline further by 1.1 million bpd.
The EIA expects U.S. oil production to fall this year and next, with WTI prices sitting below $50 per barrel through next year. The EIA’s expectation is that oil production in the United States will average 11.6 million barrels per day this year, and 11.0 million bpd next year. This is off from an average of 12.2 million bpd last year. The EIA expects U.S. liquid fuels consumption to fall this year by an average of 2.1 million bpd from 2019, to 18.3 million bpd.
The EIA cautions, however, that this month’s projections for U.S. oil production were made prior to the court-ordered closure of the Dakota Access Pipeline. Energy Transfer Partners plans to file a motion to stay that decision.
